§1936 Beginning Farmer or Rancher and Socially Disadvantaged Farmer or Rancher Contract Land Sales Program

Summary

The Secretary must guarantee loans that private sellers make to eligible beginning farmers or socially disadvantaged farmers who buy a farm or ranch under a contract land sale. To get a guarantee, the buyer must own and run the farm when the sale finishes, have a credit record showing they pay debts on time and acceptable to the Secretary, prove they cannot get enough credit without the guarantee, and the loan must meet the Secretary’s underwriting rules. The buyer must put at least 5 percent down. The farm’s purchase price or appraisal cannot be more than $500,000. The guarantee lasts for 10 years from the date it is given. A seller can choose a prompt payment plan that covers 3 annual payments (or an amount equal to 3 annual payments including taxes and insurance) or a standard plan that covers 90 percent of the outstanding principal. To use the standard plan the seller must have a commercial lender act as escrow agent or use another approved arrangement with the buyer. The Secretary may phase in these changes, but all must be in place for the 2011 Fiscal Year. Qualified beginning farmer or rancher: a new farmer or rancher who meets the statute’s rules. Socially disadvantaged farmer or rancher: a farmer or rancher who fits the statute’s definition.